We had less dramatic moves in global markets yesterday than we had on Wednesday, but yet more new highs for US Equities following another stellar performance by European Equities. Benchmark Bond Yields (US and Germany) are a little lower whilst in Commodity Markets the Industrial Metals are mostly a touch softer but Precious Metals recovered a little of Wednesdays steep losses. Favourable fundamental drivers for stock gains have included an Italian Bond Auction that was better received than last time and a large fall back in US Weekly Jobless Claims which came in at 345k from an upward revised 388k last week. The former supports the view that Japanese investors have been a supportive influence on peripheral bond markets and the Euro since the BOJ unleashed its big bazooka last week, and the latter that the soft March Employment report may have been a blip rather than the start of a weaker trend.
In currencies it is notable that US Bond Yields are lower not higher given how strong the Jobless Claims were and the US Dollar is also lower after a fleeting attempt to rally immediately after the Claims were released. Instead, support for the Euro during the morning on the back of the strong Italian Auction and continued in the afternoon.
Today is busier on the economic front as this morning we have Euro-Zone Industrial Production, whilst the EU Finance Ministers and Central Bankers meet in Dublin. Later in the US we have PPI, Advanced Retail Sales and University of Michigan Survey. The Fed’s Lockhart speaks on Fiscal policy in Iowa later this afternoon.
June S&P 500
The relentless up move in the S&P continues as the market keeps making new record highs every day. As a result the market is getting more and more overbought but when you have the Bank Of Japan following the Fed with their own $75 billion of monthly asset purchases it is very hard to stand in the way.
When this ends it will end badly but until we get two hard down days in the market in a row the trend is still your friend. The S&P traded up to my 1590 sell level with a 1593 high and I have taken profit this morning at 1585 and I am now flat. The reason I have taken profit is we have very important data from the US later especially Retail Sales and the University of Michigan Survey and I want to be flat ahead of this news. If we get a strong number I will be a seller on any rally to 1598/1603 with a 1612 stop. If the news is bad I will look to buy the market on any dip to 1570/1574 with a 1565 stop.
Euro/USD
The Euro worked well as the market traded nicely higher in the morning on the back of the Italian Bond Auction going well. I was able to take profit at 1.3100 on my 1.3050 long position and I am now flat. Today I will look to reset my long position on any move lower to 1.3040/1.3060 with the same 1.3030 stop. I do not want to be short the Euro at this time.
June BUND
No change from yesterday as I still want to sell the Bund on any rally to 145.90/146.10 with a 146.35 stop. The Bund is still very overbought and as a result I do not want to be long the market.
June DAX
The Dax worked really well yesterday as it hit my 7895 sell level with a 7897 high. I have taken profit this morning at 7845 and I am now flat. I do not want to have a position in the Dax ahead of the US data. If the data is weak I will be a buyer on any dip to 7775/7790 with a 7750 stop. I will also look to sell the market on any rally back to 7890/7910 with a 7935 stop.
June FTSE
I am a buyer of the FTSE on any dip to 6300/6325 with a 6290 stop and I will also look to sell the market on any rally to 6375/6400 with a 6415 stop.
Gold Rolling Contract
No change from yesterday as I want to buy Gold on any dip to 1520/1530 with a 1505 stop. Remember a break and close below 1510 will be very bearish.
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